The "closing" process in California is handled by escrow companies or escrow departments of title companies or banks. The escrow agent is charged with performing the duties necessary to complete the terms of the purchase agreement that the parties deposit into escrow.
Each escrow is unique. The duties of the escrow holder depend upon the terms set out in the purchase agreement with its incorporated escrow instructions. The documents used in the purchase agreements are ordinarily those prepared by the staff of attorneys of the California Association of Realtors. The documentation incorporates safeguards for the parties, especially emphasizing the duties of sellers and the opportunities and safeguards for buyers. The completed agreement serves as the agreed instructions to escrow.
The escrow holder receives and holds the earnest money deposit and any additional deposits from the buyer in trust, orders needed documents, sees that all paperwork is provided to the parties in a timely manner with proper tracking. Escrow also maintains oversight of needed loan payoffs by ordering loan demands and by obtaining a title report that shows outstanding indebtedness of the seller (which could include tax liens and late fees or HOA fees), communicating such bills to the seller and arranging to pay the amounts at close of escrow.
The escrow holder handles third-party documentation needs (such as city reports and FIRPTA paperwork), provides estimated closing costs to the buyers and estimated proceeds to the seller, orders and processes the loan documents for closing, meeting with the buyers for signing of the loan documents and to answer any questions and notarize documents. The escrow holder receives the down payment and closing funds from the buyers and handles final payoffs, which are dispersed through title companies when loans and other third-party payoffs are involved.